Zimbabwe could tax mining sector to fund July elections

Zimbabwe's minister of Finance Tendai Biti

Zimbabwe could introduce new taxes on its mining sector to help fund July elections instead of borrowing on the debt markets, Finance Minister Tendai Biti said on Wednesday.

Zimbabwe, which is on the verge of bankruptcy, withdrew a request for UN election funding last week, saying the UN had tried to "interfere" in security matters and the media.

"The fact of the matter is that Zimbabwe does not have the resources for funding the election," Biti said in a speech in London.

The UN loan agreement, thought to be worth $132-million, would have helped fund a viable election for a country that has suffered contested and bloody elections in recent years.

On April 15, Biti said South Africa would offer Zimbabwe a $100-million loan as an alternative, though a treasury spokeswoman said the two governments were only "engaged in ongoing discussions."

Biti, an ally of Prime Minister Morgan Tsvangarai, who forged an uneasy power-sharing deal with President Robert Mugabe in 2008 after bloody and disputed elections, said he was "not keen to borrow".

Aside from enacting fuel duties, which came into effect on March 9 and raised $80-million, Biti said he would consider introducing three or four other taxes, including some on the mining sector, likely to affect the world's two largest platinum miners, Anglo American and Impala Platinum.

Under an "indigenisation" policy, Zimbabwe has been demanding that foreign companies, particularly mining firms but also banks, transfer a 51 percent stake in local operations to indigenous investors.

Mugabe's Zanu-PF party proposed a legislative amendment this week that would have seized majority stakes in foreign-owned mines before the elections, prompting suspicions the money would be used to fund his campaign.

The amendment, which requires the approval of a parliament dominated by the MDC, to pass is unlikely to go through. www.miningweekly.com